According to the forecast the International Air Transport Association (IATA), the recovery in air traffic has been slower than what was expected.
The forecast reveals that global passenger traffic (revenue passenger kilometers) will return to pre-pandemic levels not before 2024, a year later than previously projected. Short-haul travel is expected to recover faster than long haul travel. Thus, passenger numbers will recover faster than traffic.
In 2020, global passenger numbers are expected to decline by 55% compared to the previous year. In June 2020 passenger traffic fell by 86.5% compared to the same month of 2019. However, June registered a minor improvement if compared to May (-91.0%). This small recovery was driven mainly by rising demand in domestic markets, especially in China. The June load factor was 57.6%.
The pessimistic recovery outlook is based on some recent trends:
- Renewed virus outbreaks in developed economies.
- Slow virus containment regulations in the US and in many emerging economies, which in combination with the US, represent around 40% of global air travel markets.
- A reduction on corporate travel due to constrained corporate travel budgets.
- A reduction of in-person meetings, which have been substituted by video calls and have consequently decreased business travel.
- Weak consumer confidence due to job insecurity, rising unemployment rate, and the fear of catching the virus. Indeed, according to one of IATA’s surveys, 55% of respondents don’t plan to travel this year.
Due to these negative trends, IATA has revised its previous forecast and issued a new projection. After a 55% decrease projected for 2020, passenger numbers are expected to rise 62% in 2021, but still they will be down almost 30% compared to 2019. A complete recovery to pre-COVID levels is not expected until 2024, one year later than the previous forecast.
A faster recovery could be allowed by some scientific advances in fighting the virus, such as the development of a vaccine. But so far, all those negative trends keep the recovery expectations very low.
Alexandre de Juniac, IATA’s Director General and CEO, declared that passenger traffic hit the bottom in April. After that month only domestic flights have seen some improvements, while international markets remain closed. In addition, the recent decision of the UK government to impose quarantine to people coming back from Spain has made consumer confidence even worse. Adding to all these there is also the fact that the cases are rising worldwide.
“For airlines, this is bad news that highlights the need for governments to continue with relief measures. A full Northern Winter season waiver on the 80-20 use-it-or-lose it slot rule would provide relief to airlines in planning schedules amid unpredictable demand patterns. Airlines need to keep focused on meeting demand and not meeting slot rules during a crisis. We are still waiting for governments in key markets to confirm a waiver,” said IATA’s CEO.
1. International Passenger Markets
In June 2020, international traffic shrank by 96.8% compared to June of the previous year. Capacity fell 93.2% and load factor was equal to 38.9%.
Asia-Pacific airlines’ June traffic plummeted 97.1% compared to June 2019. Capacity contracted 93.4% and load factor was down to 35.6%.
European carriers demand shrank by 96.7%. Capacity dropped 94.4% and load factor was down to 52.0%.
Middle Eastern airlines traffic collapsed 96.1% for June against June 2019. Capacity fell 91.1%, and load factor crumbled to 33.3%.
North American carriers saw a decline in traffic of 97.2%. Capacity fell 92.8%, and load factor dropped to 34.1%.
Latin American airlines suffered a 96.6% demand drop in June. Capacity contracted 95.7% and load factor was down to 66.2%, which was the highest among the regions.
African airlines’ traffic sank 98.1%. Capacity contracted 84.5%, and load factor was just 8.9%, the lowest among regions.
2. Domestic Passenger Markets
Domestic traffic demand fell 67.6% in June. Capacity fell 55.9% and load factor dropped to 62.9%.
China’s carriers lead the recovery, with traffic down 35.5% in June compared to the year-ago period.
Japan’s airlines saw domestic RPKs falling by 74.9% in June, compared with 90% annual declines in the previous two months.
“International traffic, which normally accounts for almost two-thirds of global air travel, remains virtually non-existent. Most countries are still closed to international arrivals or have imposed quarantines. The summer season, which is normally the busiest, is passing by rapidly. There is little chance for international air travel to recover, unless governments work quickly to find alternatives to border closures and quarantine,” said de Juniac.
IATA asks governments to implement a set of measures including the International Civil Aviation Organization’s global guidelines for restoring air connectivity. IATA also believes that accurate, fast, and affordable testing measures and contact tracing play a key role in managing the risk of virus spread while re-starting travel and tourism.